Forex Blog: Currency Trading

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I identify the next strong level of support on the USD/JPY by drawing in Fibonacci Retracement lines on to my daily and hourly chart in this instance.

Since we have stormed through more than 125 pips since I posted the trade last night of my short of USD/JPY I am now looking for potential correction levels so I can make another 10 pips.

Using my psychic forex crystal ball, I see that the next major support that I can identify is at 122.05 which is the 61.8% retracement of the 5-8th of June upmove from the support and the 23% retracement level of the larger move on the daily chart.

In addition to this, this level is a historical resistance level during 29-31st of May. The market is pretty oversold in the 4hourly term as well.

I was taught that using fibonacci retracement levels the higher the percentage correction, the lower the strength of the level, making this level strong in the daily chart, but not strong at all in terms of the last 24 hours (unsurprising given the extent of the move).

I find fibonacci a very fascinating mode of analysis.

There are two schools of thought.

1. That fibonacci works because everyone follows it and so the market makes support and resistance at those levels.

2. That fibonacci is a kind of natural sequence of numbers that occurs in spite of market sentiment.

I definitely am a “believer” so I’d go with option 2.

So, I’m looking very, very carefully for an opportunity to make 10 pips in the long around the above level, requiring various confirmation and a stop which basically stays above break even as soon as we move above break even.

I have a course which uses fibonacci numbers to create a powerful trending markets trading strategy. You can order it (less than $150) via http://www.fasttrackforex.com/advanced if you would like to get a head start on my coaching program.

Happy Pip Hunting!

Sam

PS The next support is at 121.88 beneath the one I’ve come up with. If I trade the above level (looking unlikely) my stop will not be so low as 121.88. More likely a few pips below the shadow on the previous 4 hourly candle …we’ll see.